We meet in tense and testing times.
A great many people are losing faith in a process of globalization that is leaving them behind – and in institutions and leaders who are meant to deliver.
As we were reminded yet again this week, global growth forecasts continue to drop.
Tensions around global trade and technology continue to rise.
As I said at the United Nations General Assembly last month, I fear the possibility of a Great Fracture – with the two largest economies splitting the globe into two – each with its own dominant currency, trade and financial rules, its own internet and artificial intelligence capacities, and its own zero sum geopolitical and military strategies.
It is not too late to avoid this.
We must do everything possible to avert this Great Fracture and maintain a universal system – a universal economy with universal respect for international law; a multipolar world with strong multilateral institutions, such as the World Bank and the IMF.
We have an important instrument to help navigate in this turbulent world: the 2030 Agenda for Sustainable Development, our shared blueprint for a fair globalization.
Yet we are far from where we need to be – in reducing inequality, in addressing the climate crisis, in tackling global hunger, in achieving gender equality, in expanding opportunity for young people.
As I urged world leaders at the opening of the UN General Assembly last month, we must step up our efforts – now - to achieve the 2030 Agenda and the Paris Agreement on climate change.
Other important partners are joining in support – including the business and finance communities.
Last month, 130 major banks representing one-third of the industry launched the Principles of Responsible Banking to advance sustainability in their products and services toward achieving the Sustainable Development Goals.
And just this week, along with 30 CEOs of some of the largest financial firms, representing $16 trillion in assets, I launched the Global Investors for Sustainable Development Alliance to help unlock long-term investment.
Many are deeply committed to innovative forms of finance, including Green, Sustainable Development and Social Impact Bonds.
Fiscal policy and financing will be pivotal.
This will create the predictability that private enterprise and finance needs to put sustainability at the heart of their business models. And this is what they are asking for.
Allow me to highlight three action areas that can yield exponential returns.
First, making tax systems smarter, greener, and more aligned behind the sustainable development and climate action agendas.
This includes eliminating wasteful fossil fuel subsidies and putting an appropriate price on carbon.
Let’s not forget that fossil fuel subsidies are funded by taxpayers. They don’t want their hard-earned money used to boost hurricanes, spread drought and melt glaciers.
It is time to shift taxes from income – namely payroll – to carbon. This would create a win-win solution fully backed by the middle class around the world.
We must also support all countries as they intensify efforts to mobilize domestic resources, including through tax reform and other good governance measures.
At the same time, the international community must take much more effective steps to fight illicit flows of capital, money laundering and tax evasion, which continue to drain vital resources from the developing world.
Second, we must align the international financial system behind the Sustainable Development Goals.
That means incentivizing sustainable long-term public and private financing.
It also means revisiting financial regulations that may inadvertently encourage short-termism in financial markets.
Third, it is time to break the cycle of excessive debt build-up followed by painful debt crises.
That requires taking a systemic approach that commits creditors and debtors to lend and borrow responsibly.
And we must keep a focus on countries particularly vulnerable to the impacts of the climate crisis, namely Small Island Developing States. I fully support proposals to convert debt to investment in resilience such as through the Debt for Climate Adaptation Swap initiative. We should move this from idea to reality.
Together, let us raise ambition for development finance, climate finance, and finance that is inclusive and enables markets to grow, businesses to thrive and people to live in dignity.